Wealthy Foreigners Are Clustering In Only a Handful of U.S. Neighborhoods
"The great cities are becoming elite citadels," wrote Simon Kuper this past weekend in a dramatic piece in the Financial Times (our own Emily Badger covered it on Cities Monday). It's not artist-led and bohemian-driven gentrification that's the problem anymore, Kuper argues, it's plutocratization. "The great global cities – notably New York, London, Singapore, Hong Kong and Paris – are unprecedentedly desirable," Kuper writes. But, and here's the other shoe dropping, he argues that "there's an iron law of 21st-century life: when something is desirable, the 'one per cent' grabs it."
He's not the only one. After searching for housing in London, Ryan Avent of The Economist named it an exemplar of a "parasitic city." "The world craves London and is willing to pay vast amounts of money for a piece of it." But he adds, "London property owners, as a class, are effectively an incredibly successful rent-seeking operation greedily sucking up the economic surplus generated by the city's economy."
But just how far has this so-called plutocratization gone? What exactly are the cities and neighborhoods of the global one percent?
The big takeway: Plutocratization by wealthy foreigners is a problem in a very select group of U.S. cities — three to be exact: New York, Los Angeles, and Miami. And even within those cities, it's affecting only a small group of neighborhoods within them.
The table below, from Kolko's analysis, show the neighborhoods with the largest percent of foreigners searching for real estate, according to Trulia data.
|Rank||Zip Code||Neighborhood||U.S. Metro||Share of searches from outside U.S.|
|1||90077||Bel Air||Los Angeles, CA||41%|
|2||90210||Beverly Hills||Los Angeles, CA||38%|
|3||90069||West Hollywood/ Sunset Blvd.||Los Angeles, CA||34%|
|4||33131||Brickell Ave./ Brickell Key||Miami, FL||29%|
|5||10013||Tribeca/ Little Italy||New York, NY-NJ||28%|
|6||10007||World Trade Center/ City Hall||New York, NY-NJ||28%|
|7||33897||Davenport||Lakeland-Winter Haven, FL||28%|
|8||90265||Malibu||Los Angeles, CA||28%|
|9||33896||Davenport||Lakeland-Winter Haven, FL||28%|
|10||10019||Midtown/ West 50's||New York, NY-NJ||27%|
|11||10065||Lenox Hill/ East 60's||New York, NY-NJ||26%|
|12||33132||Biscayne Blvd.||Miami, FL||26%|
|13||90046||West Hollywood/ Laurel Canyon||Los Angeles, CA||26%|
|14||90211||Beverly Hills/ Wilshire Blvd.||Los Angeles, CA||26%|
|15||90049||Brentwood||Los Angeles, CA||26%|
|16||33139||Miami Beach/ South Beach||Miami, FL||26%|
|17||90068||Hollywood Hills||Los Angeles, CA||26%|
|18||33009||Hallandale Beach||Fort Lauderdale, FL||25%|
|19||33140||Miami Beach/ Mid-Beach||Miami, FL||24%|
|20||90024||Westwood||Los Angeles, CA||24%|
L.A. tops the list with three neighborhoods: Bel Air, Beverly Hills, and West Hollywood. All in all, L.A. has nine neighborhoods in the top 20. Miami's Brickell is fourth. Miami and Fort Lauderdale combined account for five of the top 20. New York's Tribeca is fifth and World Trade Center area sixth. New York accounts for four neighborhoods of the top 20.
As Kolko notes, "What do these neighborhoods have in common? All of the global Los Angeles, New York, and Miami neighborhoods are pricey: foreigners search in some of the most expensive neighborhoods in each of these cities. … According to the Census, more than one third of the adults living in the Beverly Hills, Brickell, and NYC Tribeca / Little Italy ZIP codes were born outside the U.S." But he adds, "the impact of foreigners on U.S. housing is incredibly localized: while foreigners account for more than 25% of the home searches in a handful of global neighborhoods, most Americans live in neighborhoods where foreigners make up less than 3% of the home-search traffic. There's plenty of room for foreigners to branch out more."
On Monday, Badger noted, "Cities where only the super-rich can live will cease to function like cities are supposed to … A city with only one narrow class of people isn't a city in the truest sense. In fact, it's more like a suburb."
This echoes what Jane Jacobs once told me when I asked her about the gentrification of Manhattan's SoHo and surrounding neighborhoods. Calling attention to the vibrancy of cities, the mobility of people and capacity of great cities to constantly evolve and take on new functions in new spaces, she simply said: "When a place gets boring even the rich people leave."